Fed sees uncertainty throughout the country

Friday, January 18, 2013

In its latest Beige Book summing up current economic conditions in 12 key regions throughout the United States, the Federal Reserve outlined mixed transportation results in the closing months of 2012.
Four of the districts reported on the transportation outlook of industry firms in their areas, with most of them seeing some positive aspects and increases in a variety of modal freight shipments, but not enough to signal significant growth ahead.
This uncertainty mirrors the economy as a whole. While consumer spending in some districts is growing, consumers are spending less in other regions of the country. Nevertheless, the economy, according to the Fed, is regaining strength.
The Cleveland, Atlanta, and Richmond districts saw increases in freight transportation, mostly due to Hurricane Sandy recovery efforts. In Dallas, transportation results were mostly down.
While most Hurricane Sandy rebuilding activity boosted truck volumes elsewhere in the country, Richmond saw port activity derived from the storm itself.
“Trucking firms in the Richmond District reported a flattening in revenues; however, the district’s port activity was boosted by ships diverted by Hurricane Sandy,” according to the report.
Atlanta firms aren't too concerned about trucking, but firms based there are starting to look warily at their ocean freight activity due to the ongoing problems with the Mississippi River. Freight transportation in Atlanta experienced a noted increase in tonnage in November, the first boost since July. Trucking officials there are looking forward to housing growth.
“A large truck dealer reported it is expanding sales to include flatbed trailers in response to anticipated increased movement of construction materials as a result of improvements in the housing sector,” according to the report.
In Dallas, firms remained cautious and uncertain about the way forward, mimicking what has been happening in the global economy. Intermodal services slowed at the end of the year, but container volumes were up. Despite strong growth in energy shipments, railroad activity remained flat.
Cleveland-based firms were also worried about the economy and said hiring plans for this year are tentative at best. But following a two-month drop in freight transportation in the district, freight has gotten better since November. Maintenance costs were holding steady, and diesel prices were falling. Still, there are a lot of unresolved issues moving forward.
“Freight executives were fairly positive in their outlook for 2013, with the caveat that a resolution is reached on issues involving fiscal policy,” according to the report summing up Cleveland’s outlook. “Spending in 2013 is expected to be similar to 2012 levels, and it will be mainly for replacement.” - Jon Ross